Riassunto di Sustainable Operations Management (SOM)

SMART TECHNOLOGIES, BIG DATA AND CONNECTIVITY

Smart product  product with an incorporated form of intelligence made up of microprocessors

allowing them to connect to other devices

The demand for connectivity and integration is rising, rendering the boundaries between

competition and cooperation faint and stimulating the convergence of industries  democratization

of information through collaborative platforms and knowledge-sharing 3

MEGATRENDS AND SUPPLY CHAIN MANAGEMENT

Demographic growth + concentration in mega-cities  increase in the demand for goods and

services

The environmental impact due to the growth in populations may be softened thanks to the

development of clean technologies and the issue of new environmental standards by supranational

regulatory bodies  this will lead to new methods for measuring the value created through the

identification of metrics and KPIs capable of rating economic + social + environmental

performances

New generations  Z generations/digital natives

New opportunities offered by the connectivity, which will enable alternative forms of employment

The increased sensitivity of the new generations towards sustainability will lead to an increase in

low-impact urban mobility initiatives (es. Mini electric cars, car-sharing, consumption of green

products…)

THE DEVELOPMENT OF SUSTAINABLE OBJECTIVES FROM THE TRIPLE BOTTOM LINE

PERSPECTIVE

Sustainability objectives refer to 3 performance levels – 3P:

• Profit  economic and financial sustainability and its development prospects in the long

term

• Planet  environmental protection and the impact of the business on the environment

• People  social equity and cohesion, economic prosperity and the protection and promotion

of fundamental rights

A deep-rooted vision in several business contexts may be in contrast with these objectives,

presuming that the maximization of profit may justify paying less attention the environmental and

social sustainability  this trade-off must be rejected

Profit + Planet + People  sustainability:

• In space  better distribution of the value created

• In time  need to guarantee intergenerational equity, offering future generations the same

opportunities that are offered to those of today’s generations

SLDI CODE SUSTAINABLE DEVELOPMENT MATRIX (Moxk and Wernke, 2011)

Each component is developed according to series of guiding principles aimed at balancing the

elements of Utility – Efficiency – Effectiveness 4

PROFIT:

• Create value

• Eliminate waste

• Recognize interdependence  by including all of the stakeholders with a variety of interests

and by expanding the scope of interest to include neighboring, communities, government

(…) projects teams are on the way toward achieving the optimal economic and

environmental returns on investments: there is no economic capital without preserving and

maximizing environmental and social capital

PLANET:

• Model nature  all the sustainable technology and intelligence necessary can be found by

understanding and modeling our natural biological systems through the study of nature’s

best ideas and imitating them to solve human problems; connecting projects to nature

equals success from an environmental, social and economic context

• Energy flows  minimizing the amount of non-renewable energy and pollutants

• Humans and nature co-exist  by incorporating natural principles and practices, projects

can deliver a sustainable imprint that has lower impact: for a sustainable future, humans

must effectively integrate with nature

PEOPLE:

• Accept responsibility  adhering to a decision model that maximizes economic results,

minimizes environmental impact and restores degraded ecosystems, and maximizes the

quality of life

• Quality of life  focusing on the innovative ways to meet stakeholders’ quality-of-life need 5

• Share knowledge

SUSTAINABILITY: THE REASONS WHY

• Financial payoffs  reducing costs + increasing return and market appreciation

• Consumer-related payoffs  increasing customer satisfaction, reputation and market share

• Operational payoffs  process innovation aimed at increasing productivity and the yield of

the used resources, reducing process times and minimizing waste

• Organizational payoffs  increasing employee satisfaction + better relationship with

stakeholders + reducing risk and interventions of regulatory bodies + increasing

organizational learning

The drivers that lead a company to increase its compliance with the principles of sustainability

differ for:

• Legal reasons  in many contexts, laws and regulations that impose consistent behavior

and that sanction elusive/illegal behavior are drawn up

• Compliance reasons with regard to specific certifications and accreditations  the choice to

adapt behavior and internal processes to the regulations may be due to competitive

opportunities, to obtain licenses in order to set up business in certain areas; in other cases,

it may be due to communication purposes, to improve quality or recover efficiency…

• Reasons connected to relationships  to maintain high level of reputation, the management

may be forced to set up sustainability projects

• Reasons linked to profitability opportunities (es. Investments in clean technology to reduce

costs)

• Value-based reasons  many companies invest in company welfare setting up day-care

facilities for the children of their employees, distributing incentives and bonuses linked to

sustainability projects (…) because their success also comes from the opportunities offered

by the community and they want to give something back

COMPLIANCE ENFORCEMENT

INNOVATION AND VALUES

ORIGIN APPROACHES Compliance 

INTERNA VOLUNTARY COMPULSORY voluntary choice

L to comply with

practices and models linked to sector certifications or accreditations with bodies that

ESTERN propose environmental and social responsibility systems; companies are

AL undertaking to develop codes of conduct inspired by the guidelines of third parties 6

Enforcement  external and binding obligations linked to laws and regulatory requirements on

environmental and social responsibility imposed by regulatory bodies

Innovation and values  voluntary choice inspired by internal reasons linked to improvement

objectives in terms of internal efficiency or external visibility and presence on the market or choices

based on basic ethical values 7

3 – MEASURING SUSTAINABILITY

THE MEASUREMENT OF GDP: LIMITS

The assessment of the wellbeing of a nation based on its GDP is that the countries capable of

producing economic value are also environments that are more favorable to the development of

individuals and the improvement of their quality of life  this model has been criticized since the

1960

Several distortions in the GDP emerge when the following aspects are taken into consideration:

• Assessment of public services  if a product/service doesn’t have a market price, it is

conventionally valued by taking into consideration the resources used to produce it; for

example, the total expenditure for public health does not always express the degree of

productivity of the system (USA > Italy)

Sometimes the growth of the economy is supported by public spending allocated to pursuit

of expansionary policies and not to investments in specific areas

• Evolution of the quality level of products  due to technological innovation and the

increasing efficiency of production systems, the costs of the products are reduced, and the

national accounting tends to underestimate the contribution made by the sectors subject to

these trends to the economic development of the country

• Increase in GDP as a result of inefficiencies of the system  sometimes the higher

expenditure is linked to the need to confront various forms of inefficiencies; for example, an

unreliable railway network means that private means of transport are more widely used,

with consequent higher transport costs

• Stock vs flows  GDP is a measurement of flow, not stock, so any stocks accumulated over

time are ignored; this is a restriction because saving is an essential component of financial

soundness

• Transactions for consideration as a value driver  GDP grows depending on the number

and value of business transactions but not all of them lead to an improvement in the

wellbeing

The Commission on the Measurement of Economic Performance and Social Progress in 2008

drew up a report containing 12 recommendations for guaranteeing a way of measuring economic

development that overcomes these restrictions

Genuine Savings Indicator (World Bank)  it focuses on the allocation of the natural, human and

capital resources of each country, with the objective of understanding how these evolve over time

Ecological Footprint (Wackernagel & Rees)  it calculates the number of hectares of land

required to sustain current standards of living in various countries

Biocapacity  number of hectares of land required to maintain a certain global production,

consumption and disposal flow

HUMAN DEVELOPMENT INDEX (HDI)

It assesses the progress of a country based on the opportunities made available to each individual

Economic development is the means through which individuals develop their capabilities

The United Nations Development Program (UNDP) has been publishing the Human Development

Reports since 1990. The HDI expresses the results achieved by the economies in 3 different

areas: 8

• Physical wellbeing (life expectancy)

• Degree of education (average degree of literacy and schooling)

• Decent standard of living (Gross National Income per capita)

Each of these assessment profiles is quantified by an indicator that expresses the position of each

Actual value−minimum value

I =

country compared to the best performer Maximum value−minimum value

I I I

 min 20  min 0  min 163 $

life education income

Maximum values come from annual recordings

3

√ I ∗I ∗I

HDI = (geometric average)

life education income

SUSTAINABILITY MEASUREMENT IN COMPANIES

ASSESSMENT PROFILES

In a company the measurement of sustainability is based on the triple bottom line

Measuring performance consists of supporting management in the strategic planning process

Environment sustainability reporting is widely used, especially in larger companies (76% in

America, 73% in Europe, 71% in Asia), and the percentage of companies involved in sustainability

reporting is never <50%

ENVIRONMENTAL SUSTAINABILITY ASSESSMENT PROFILES

CATEGORIES SUB-CATEGORIES MEASURABLE OR VERIFIABLE

ELEMENTS (examples)

End-of-pipe measures

POLLUTION CONTROL Compensation measures

Modifications to the product

PREVENTION OF

POLLUTION

ENVIRONMENTAL Modif